Oh Woe is Siebel
'We did not expect the results to be this low'
Siebel has blamed poor execution and weak demand for its expected first quarter loss, ending a fragile recovery of the firm's finances.
In its preliminary results announcement, the California-based business software firm said it expects revenues of between $297m and $300m for the first quarter. This compares to revenues of $329.3m for the same quarter last year.
Net losses for the quarter are expected to be between $7m and $9m, with losses per share of between $0.01 and $0.02 per share.
"Though our services and maintenance businesses continued solid growth in the first quarter, we are disappointed in our application license revenue," said Michael Lawrie, CEO of Siebel Systems. "Though we predicted some license revenue softness going into the quarter, we did not expect the results to be this low."
He blamed the results on the company's failure to close a number of imminent deals during the quarter and on weak demand throughout the industry. The company is also under pressure from competitors like SAP and Oracle, who are moving into Siebel's CRM niche. It also faces competition from Salesforce.com, which provides CRM software as a rental service, thereby removing the need for capital investment in CRM software.
The company is taking a charge of $11m for the acquisition of edocs. Excluding the charge for edocs the company would have had a net profit of between $2m and $4m, or between $0.00 and $0.01 per share. The acquisition of edocs follows the 2004 acquisition of Irish-based financial software company Eontec, which added bank branch teller and internet banking systems to its CRM portfolio.
The disappointing results will increase the pressure on Lawrie, who faces a rebellion from one important shareholder. Providence Recovery Partners is pressing Siebel to use cash reserves to buy back shares and to improve the company's chances of being acquired. Providence is inviting other major shareholders to discuss the company's financial options.